An IRS announcement could cost upstate NY charities, little leagues, public libraries, museums and other non profit groups thousands of dollars each

On June 8th, the IRS released a list including over 6,000 Upstate New York nonprofit groups that automatically lost their tax-exempt status for failing to file annual reports for three years in a row. The Pension Protection Act of 2007, requires tax-exempt organizations to file an informational return or notice each year with the IRS, and the law automatically revokes the tax-exempt status of groups that do not file for three consecutive years. As a result, the first nonprofits to be revoked under the new law saw their status removed based on 2010 returns, filed in April of this year.

In many cases, nonprofit groups may have been unaware of this requirement to file annual reports, and the stripping of tax exempt status is a mistake rather than a sign that the group is no longer operational or has not filed the proper paperwork. Luckily, this IRS error can be reconciled, but nonprofit groups must act soon to avoid paying higher fees.

Click here to view a recently-released Internal Revenue Service (IRS) list of New York nonprofits (Click here to view Upstate New York nonprofits organized by zip code), to ensure that your group has not been mistakenly stripped of tax-exempt status.

If your group discovers it has been improperly stripped of the tax-exempt status, please take the following corrective actions:

• If your nonprofit group has met its filing requirements over one or more of the last three years, fax copies of your past tax returns to be reinstated into tax-exempt status at no cost to your group.
• If your nonprofit group makes under $50,000 in income, and has not filed tax returns over the past three years, please file for reinstatement before December 31, 2011, for a reduced fee of just $100.
• If your nonprofit group does not file before December 31, 2011, the fee to file for reinstatement jumps to between $400 and $850 for 2012.
• If your non-profit group does not file before December 31, 2011, the fee to file for reinstatement jumps to between $400 (under $10,000 in annual income) and $850 (over $10,000 in annual income) for 2012.

If an organization on the Auto-Revocation List has documentation that it met its filing requirement for one or more years during the three year period, what should it do? An organization possessing documentation (an IRS receipt for a filed return, for example) that shows it has not failed to file for three consecutive years should contact Customer Account Services, or send the documentation directly to the Exempt Organizations Account Unit:

By Mail:
Internal Revenue Service
1973 North Rulon White Blvd.
M/S 6552
Ogden, UT 84404

By Fax: (801) 620-5555

Do not wait until it is too late! Check the IRS list above to make sure that your paperwork is up to date, and that your non-profit group has not lost its 501(c)(3) status!